Pennies make dollars

Pennies make dollars

Grandma Hardesty gave us the pennies from her purse. We dutifully divided them equally, even with the cousins not present, and saved them in our piggy banks.

A few times a year, our banks were heavy enough that we counted out 50 pennies to put in the red paper rolls from the bank. It was a big event when we went to the bank, deposited our stash, and got a notation in our passbook showing the amount of our total savings. It was a really big deal when we surpassed the $100 mark.

Grandpa Ramga was a busy livestock and grain farmer who milked a few cows. He had a get-it-done attitude that resulted in a lot of land to farm and a cost-effective approach. With 12 children to help with the farm work, and to find a way to feed and manage them, the Ramga farm required uncommon sense to keep functioning.

Observe, then decide
One long-standing lesson that Grandpa taught me was a discussion about a month after he’d traded his smaller green tractor for a pink tractor (colors changed to protect the sensitive), the same size as his big green tractor. The pink tractor was $1,000 cheaper than another big green tractor, and his neighbor just raved about the pink tractor’s power.

Grandpa’s neighbor never did something that came naturally to Grandpa; evaluate his decisions and make adjustments. Grandpa had identical plows to pull behind the pink tractor and the big green tractor, and they plowed in the same field all day. The fuel used was 50 percent more for the pink tractor, and the ride was rough like one of our red tractors that Dad called “The liver beater.”

The pink tractor never spent the winter in a Ramga shed as it was traded in quickly. Lesson one: evaluate your decisions. Lesson two: make corrections quickly.

Economic conditions on dairies have us discussing and evaluating constantly. Some of the discussion occurs over the backs of cows, but it also migrates to the office with records, spreadsheets and calculators creating numbers we can’t ignore.

A lesson that would fit with Grandpa’s is, “We have been successful running our dairies, and adjustments may not be huge.” For every dime we spend we may get 15 cents back in good times, but we should still do them if we get back 12 cents now. That’s how we’ll fill two red paper rolls to make a dollar.

We may have some waste, and we need to find it. We certainly have opportunities, and we need to find them, too.

Vets look for your benefits
One of the discussions that I take head-on as a veterinarian is how cost effective our services are to the dairy. Veterinary services are a very small input to a dairy, but Mom always complained about it because you get an itemized bill.

It wasn’t like the cost to milk a cow, which included the daily cost of the parlor itself per cow, electricity, repairs, supplies like towels and teat dip and, of course, labor, which was low for Mom because we didn’t get paid very well.

We have a challenge with the very first item — the parlor. How long is the parlor going to last, and how many cows will it milk? If we do a good job of enterprise accounting, we may realize that the cost to milk our cows is higher than we think. If we don’t have good accounting records, we tend to pick on expenses that are distinct in their descriptions like the vet bill.

Jan and I have a great relationship, but he still makes me justify my existence. “When I add the trip charges, you cost 10 times as much as having Julie do the preg checks. Why should I hire you?”

Jan’s pointed questions came at me one hot July afternoon as the sweat was pouring off me, and I might have been reconsidering my chosen profession. My reply was, “Julie is a great herdsperson for you, and she is comfortable finding open cows down to 35 days.” I can check accurately down to 28 days, saving a week as most ovsynch and resynch cows started on herd check day will present at Day 32 an ideal day to restart the cycle.

You present about 65 cows a week for first pregnancy exam with about 25 open. If we are very conservative with our cost of a day open at $3 — as feed costs soar, this may be closer to $5 — we really need to make reproduction hum. A day open charge of $3 times seven days times 25 cows is $441. That is about what the whole herd check charge is, and I also do the rechecks in that time.

Wonderful and inexpensive as Julie is, she becomes a pink tractor on the dairy, costing more than the alternative. Some of the same issues exist with drawing the blood pregnancy test because the results are not immediate like an examination. But it is even more of a pink tractor because it costs as much as an exam does, and the only difference is the trip charge.

Not all charges are costs
The trip charge is pretty quickly balanced if you allow your veterinarian to be an advisor on the dairy. One example of this occurred on a large dairy that has an employee check pregnancies. Reproduction results were disappointing, and they invited me to their herd check to check the checker.

I followed him for awhile, then we started alternating. We discovered that the first breeding cows had poor quality CLs (corpus luteums), and I suggested modifying the breeding program for first service. Three months later, we checked the results finding that first-service conception rate had improved by 8 percent.

This resulted in hundreds of thousands of dollars more income for the dairy. If there had been no improvement, it would have cost the dairy $30,000 in the course of a year.
We have to evaluate the decisions we make, or we may be buying pink tractors and happily losing money without knowing it. Pennies make dollars, and this will be another one of those years that every dollar counts. What makes you money? Do you know for sure?

This article appears in the September 25, 2012 issue of Hoard's Dairyman.